Craft Businesses Thrive During the Holidays and Recessions

Our ginger bread house

My thoughts turned to craft businesses this week when my daughter and I headed off to Michael’s, America’s largest specialty arts and crafts retailer, to buy supplies for a holiday craft. We had thought of making ornaments but Lisa didn’t like the available materials so we decided to make a ginger bread house instead. For anyone who doesn’t understand the appeal of crafts, it’s not always the way your finished item looks; it’s the experience of creating it.

My daughter has had a stressed-filled year so I am a fan of anything that makes her laugh nonstop. And the two of broke into raucous laughter as we tried to keep our various candies from falling off our crazy little house. We had the best time making our little cookie house; it was so much fun that we smile every time we eye our little concoction.

Thinking of this I wondered how big is the craft business? Where is there money to be made? Michaels’ and other craft retailers like AC Moore, Toys R Us and Jo-Ann’s Stores appear to dominate this industry that serves the women over 35 who spend the biggest bucks on arts and crafts materials. In this highly concentrated industry, the top 50 companies generate about 85 percent of the revenue, according to First Research data on the toy and hobby industry.

I never found an actual dollar amount for the size of the industry, but my research turned up lots of interesting little facts. In May, Inc.com described cake baking and decorating and the hobby industry in general as one of the best small businesses to start this year citing the comfort factor. When times are difficult people turn to products and activities that provide comfort. So if you’re in the craft business or looking to start one, you’re in the right place at the right time.

Craft 'N Things Magazine

Toys make up about 30 percent of this industry, followed by craft supplies at 15 percent, kitchenware and home furnishings at 10 percent. Other products include games, hobby goods, artificial flowers, and sewing and knitting materials. Toy stores may provide assembly or delivery services. Hobby stores may offer classes, known as “how-to” seminars.

Consumers will continue to be deal minded with emphasis on gifts people will really use and lots of do-it-yourself projects. Large companies offer wide selections with deep discounts. Smaller companies should probably stick to specialty products, provide superior customer service or serve local markets, according to information provided by the Craft & Hobby Association.

The industry is significant enough for the Wall Street Journal to carry a story this week about the intersection of the craft site Etsy with social media. As the Journal put it, “online retailers (such as Amazon.com and Etsy Inc.,) are experimenting with the idea that friends can make shopping easier.”

Crafts - Beaded jewelry

Etsy has a special challenge. It’s a website where small craft businesses promote their wares. The problem is that the site still is struggling to attract the mainstream consumer. So this social-shopping idea could be major for the many crafters who populate Etsy. The idea is to use Facebook ‘Likes’ to get friends to recommend their preferences – making it easier to give your friends gifts they will actually like.

Such social-shopping efforts are still in the experimental stage, according to the Wall Street Journal. But in a separate article, JWT and Ogilvy & Mather Worldwide, two big New York based advertising agencies says such social-shopping efforts or “shopper marketing” is definitely the future. The two agencies have formed a joint venture in North America to help marketers and retailers guide consumers on the so-called path to purchase.

“The battle to land on shopping lists or in shopping carts starts long before consumers set foot in stores as they spend more time researching potential purchases online or asking friends on Facebook what to buy,” according to JWT/Ogilvy Action as the joint venture is called.

So what does all of this mean for the small home based crafter or information marketer? With a little further research I learned that 24 percent of holiday shoppers said they were making gifts, representing an increase from last year.

What can we expect in 2011?

Research by Ogilvy suggests that consumers are definitely still feeling the pinch from the recession. Consequently,
• 52% – cook dinner at home more often
• 33% – keep a car longer than normal
• 30% – pay down debt
• 27% – stop taking a vacation
• 26% – create and stuck to a budget

So what does that mean for marketers?
Summing up the lessons from the research, Graceann Bennett, Director of Strategic Planning at Ogilvy, says marketers have to follow the path the consumer takes from Facebook to groupon to review sites. Coupons and percentage-off deals are no longer enough, said. The pre-sale is more important than ever which is why you’ll see more stores opening at midnight, 3am and other off-hours with limited “special price” to get shoppers in the door.

If you are an affiliate marketing running a review site, it’s important to understand the environment in which you are operating if you’re to succeed in getting commissions.

Well, I started talking about craft businesses and I’ve gotten a little off track. But I hope this information gives you food for thought as you plan your promotional activities for 2011. Have a wonderful holiday and happy crafting.

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